Our Startup FAQ section answers the most frequently asked questions. Have a question that isn’t answered here? Email us at info@paceofficial.com and we’ll get back to you.
Is my idea viable?
To know if your idea is viable, the most important thing to do is to take feedback. If you already have customers, talk to them and ask them for reviews. If you’re still in the development stage, then take feedback from people around you, like your friends and family.
Secondly, think of yourself as a customer. Would you pay for your idea? Would you buy it? If you would not buy your product or service yourself, you will be unable to convince your customers to buy them as well.
How do I protect my idea?
If you have a groundbreaking idea or even if you’re just worried about it being copied you should file a patent, trademarks, and copyrights. If you’re unfamiliar with these terminologies, you should consult a professional. It’s better to be safe than to have the wrong paperwork filed. Moreover, sign non-disclosure agreements when necessary. Especially within the employees of the company in the early stages.
Lastly, remember laws work differently across the world. Know and educate yourself with the rules and regulations of your country before going for anything.
Should I leave my education/job to pursue my idea?
You might have started working on your idea as a side project. Or maybe you had a great idea to begin with. At some point, you’ll find yourself having time management issues, with the situation getting hrder once you start finding success.
It’s great to look at examples of college dropouts and people who left their jobs yet went on to become successful entrepreneurs and businessmen. However, you should evaluate your situation first before following an example.
There’s a great deal of risk involved, so it’s important you ask yourself a few questions. Are you completely sure about your idea and confident that it will work? Are you willing to survive until it gets off the ground? Do you have a family to look after? Do you have a backup plan? Can you afford instability?
It is imperative that you ask yourself these questions and then make your decision. If you want to go full time on your idea, then, by all means, go ahead with it. However, be sure about it first, and remember to evaluate everything.
What is the ideal team size?
The magic number is 3.
You need someone to drive the vision and handle the business end, a technical expert to handle the implementation, and a creative genius to give your startup the perfect look and identity.
Check out our post on creating the perfect team for your startup here.
See: Building a Great Startup Team
How do I split equity?
There is not one way to go about this; It will also vary from case to case. The important thing to do is to have an open discussion and to be honest with the team. Greed should be put aside and you should think about the company’s long term future.
It is recommended not to make an even split. The original founders and brains behind the idea should keep the majority. Maintaining control and keeping everyone motivated are equally important. The founders should also remember giving up too much equity will become a bottleneck later on when the need for investment arises.
Evaluate your team members and their contributions, and then split accordingly. You could also use an equity split calculator to help you out. In the case of a family business, it is better to plan early for a successful family business transition planning.
The team should have the equity conversation in the very beginning, and put it into writing.
More on splitting equity here: Startup Equity Explained
How big should a stock option pool for employees be?
Not more than 15-20%. Cliff vesting should be taken into account here. Cliff vesting means that the employee should be employed for a certain amount of time before the employee benefits from this.
Standard vesting for the stock option pool is 4 years, with a one year cliff vesting period.
How do I incorporate my startup?
This is dependent on three things.
Location, type and the needs of your startup.
Know all the structures available, and choose the structure that suits your startup the most. Investors typically prefer a C-Corporation structure as it is ideal for raising capital.
Also, it is important that you hire and consult an experienced lawyer and then file for incorporation.
See: Incorporation in USA
See: Incorporation of startups in Pakistan
When and how should I get investment?
It is highly recommended not to seek investment during the development stages of the startup. The founders don’t need to be paid during the early stages. There’s no need for hiring people at the start. You should try to keep your expenses as low as possible and avoid raising capital for as long as possible. Bootstrap your startup in the early stage and take out your savings and use them. Ask your friends and family for money without having to give a piece of the business in return.
You need to have your Minimum Viable Product (MVP) developed and ready before you look for investment. Your MVP will be the first basic version of your product that you’ll be able to show to people as idea proof. Once you’re ready with your MVP, then it is the right time to go knocking on investors’ and venture capitalists’ doors.
Read: Startup funding Explained
What are the biggest startup mistakes?
When starting out, startups tend to make mistakes that really affect the long term stability and growth of the company. Here are the top mistakes that startups make:
- Inadequate Research
- Hiring poorly
- Lack of focus
- Trying to build a startup alone
- Money Handling
- Failure to execute sales and marketing techniques
- Ignoring social media
- Not having the right co-founders
What kind early records do I keep for my startup?
- Employee Contracts
- NDAs
- Incorporation Papers
- Invoices
- Bank Accounts
- Tax Filings
- Financial Statements
Bonus
Try to keep your ego and your greed at bay. Your own self worth is not tied to the success or failure of your business. This way you’ll be able to learn and grow. It is important to understand various perspectives and take in criticism in order to grow.
